Unrelated Business Income Tax

Internal Revenue Code section 513(a) defines "unrelated trade or business" as any trade or business the conduct of which is not substantially related to the exercise or performance of an organization's exempt purpose or function. Therefore Minnesota State Colleges and Universities, even though a tax exempt entity, is subject to income tax requirements.

Some common activities conducted by colleges and universities which raise potential unrelated business income concerns are as follows:

facility rental income

advertising income

bookstore operations

use of recreational facilities by the general public

operation of parking lots, and

dormitory rentals

Unrelated business income needs to be reviewed on a case-by-case basis and should be considered before engaging in the activity or entering into the contract.

If you have questions or comments please e-mail us (
tax@so.mnscu.edu) or refer to the staff directory link at the top of this page for additional contact information.